Ask any small business owner and they’ll tell you: Their work is rewarding, but it is challenging. Sometimes Washington makes it worse.
Take, for example, the Affordable Care Act. Just over nine years ago, the law was sold to small businesses on some rosy promises.
“For the first time, small business owners and people who are being priced out of the insurance market will have the same kind of choice of private health insurance that members of Congress give to themselves,” said President Obama at the time.
Yet today, about 80 percent of small business owners say they remain worried about the cost of health coverage. Over the last 15 years, the cost to cover one employee under small group health insurance rose nearly 200 percent — from $2,196 to $6,435.
Now small businesses face a new threat; and a confusing one given the deregulatory thrust pursued by the current administration.
President Trump has taken steps to improve health coverage and drug affordability, but his administration’s latest plan to impose an International Pricing Index (read: price controls) for Medicare drugs typically administered by physicians and ranging from chemotherapy to routine vaccines is not one of them.
Under the plan, Medicare would tether payments for these therapies to an index of what our competitors abroad reimburse for the same products; putting the world’s most innovative drug market at the mercy of what bureaucrats in Slovakia and Greece are willing to shell out for lifesaving care.
One might think of this policy as impacting large hospital systems and health care conglomerates, but nearly 50 percent of physicians who provide at least 20 hours of patient care per week own their own practices. What’s more, a 2016 survey from the American Society of Clinical Oncology found that 46 percent of oncologists offices — where many of these Part B drugs are administered — are small practices with anywhere from one to five oncologists.
These are not corporate giants with lobbyists and lawyers. They are small practices run by physician-owners in our communities.
If Washington slashes their reimbursement rates for Part B drugs, physicians could simply stop providing the treatments — instead referring patients to more costly hospital settings — or, worse, these community-based practices could close altogether. Unfortunately, that is the current trend given declining reimbursement and other cost issues, which will only accelerate under an IPI scheme. This means patients will have less access to cancer care and other treatments, or be forced into higher-priced hospital settings.
President Trump blasted price controls as recently as last May, and the “American Patients First” blueprint noted that “Price controls prevent drug companies from charging market rates for their products, while delaying the availability of new cures to patients living in countries implementing these policies.”
So what changed?
To be clear, this administration has pursued many solid policies to help entrepreneurs and small businesses succeed. As we wrote to the president just last December, “The many policy initiatives pursued and implemented by your administration have made a big difference for the health of small business finances.”
Transferring other countries’ drug policies directly onto the American consumer, however, is just bad medicine. That is why we joined more than 50 free market groups and filed our own comments to voice opposition to the administration’s IPI model.
We’re not alone in this view. A recent Politico headline summed up the opposition to price controls succinctly: “Trump’s drug price plan faces resistance on all sides.”
When it comes to something as critical as drug costs for patients and small businesses in the health sector, America cannot play copycat on misguided policy.
Today, Medicare Part B’s drug reimbursement is tied to the average sales price (ASP) — a market-based metric that already reflects negotiations between private insurers and drug manufacturers, and includes price discounts from drug makers.
It is not a perfect system, but the Trump administration was proud to announce that it led to an overall decrease in payment amounts for the top 50 Part B drugs earlier this year.
We need more competition policy and less government intrusion — importing foreign price controls would have severe consequences for many family-owned doctors’ offices, as well as the small innovative companies that dominate the bio-pharmaceutical industry.
The Council for Affordable Health Coverage, for example, offered a more narrowly tailored, value-based approach to Part B reimbursement in comments to the Trump administration last December. This could bring relief to patients while staving off the negative effects that the IPI model would impose on small businesses.
President Trump said himself, “Competition is the key to lower drug prices,” and we agree.
Let’s pursue solutions that lower health costs and leave government price control schemes overseas.
• Karen Kerrigan is president and CEO of Small Business & Entrepreneurship Council.
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